Canada’s three major lenders beat profit estimates on lower provisions By Reuters

(Reuters) -Three of Canada’s major lenders reported better-than-expected quarterly profits on Thursday, as signs of economic recovery helped them reverse bad debt provisions and their capital markets and wealth management units boomed.

Royal Bank of Canada (RBC), the country’s largest lender, released funds worth C$260 million from its loan-loss reserves in the second quarter, compared with provisions of C$2.1 billion a year earlier.

Canadian Imperial Bank of Commerce (CIBC) reported an almost 98% fall in provisions, while Toronto-Dominion Bank recovered C$373 million of funds set aside to cover bad loans.

Analysts had expected average core earnings per share for Canada’s top six lenders to more than double in the three months through April from a year earlier when they set aside nearly C$11 billion ($9.10 billion) to cover potential bad loans.

CIBC and RBC also benefited from a surge in deal-making and trading activity that boosted their capital markets businesses, with the latter reporting record revenue in investment banking.

RBC posted adjusted earnings per share of C$2.79, compared with a Refinitiv IBES estimate of C$2.48 a share.

CIBC’s net income excluding one-off items was C$3.59, handily beating estimates of $3.01 a share. TD, Canada’s second-largest lender, posted adjusted net earnings of C$2.04, exceeding estimates of C$1.76 per share.

Results excluding the impact of provisions were, however, more subdued, particularly for TD Bank. The lender’s pre-provision earnings fell 16.8%, compared with a 14% rise at CIBC and an 11% increase at RBC.

($1 = 1.2094 Canadian dollars)